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Fleisch v. First American Bank

May 21, 1999

CHRISTOPHER R. FLEISCH, PLAINTIFF-APPELLANT,
v.
FIRST AMERICAN BANK AS TRUSTEE OF THE HELEN D. FLEISCH TRUST AGREEMENT DATED MARCH 17, 1988; DEFENDANT-APPELLEE, AND RICHARD I. ANGELL, M.D.; GRACE EPISCOPAL CHURCH OF HINSDALE, ILLINOIS; EPISCOPAL CHARITIES AND COMMUNITY SERVICES OF CHICAGO; THE CATHOLIC CHARITIES OF THE ARCHDIOCESE OF CHICAGO; THE SALVATION ARMY, METROPOLITAN DIVISION OF CHICAGO; AND JIM RYAN, ATTORNEY GENERAL OF THE STATE OF ILLINOIS, DEFENDANTS.



Appeal from the Circuit Court of the 12th Judicial Circuit, Will County, Illinois No. 97--MR--8685 Honorable William R. Penn, Judge, Presiding.

The opinion of the court was delivered by: Justice Slater

IN THE COURT OF APPEALS OF THE STATE OF ILLINOIS

Prior to her death on November 19, 1993, Helen D. Fleisch (Helen) created a trust to provide income for her son, plaintiff Christopher R. Fleisch. On June 13, 1997, at age 54, plaintiff brought suit for declaratory judgment, seeking court approval of a proposed "family settlement agreement" to distribute the corpus of the trust. Following a hearing, the trial court granted judgment against plaintiff. Plaintiff appeals. We affirm.

FACTS

Plaintiff was Helen's only child, and he is the only income beneficiary of the trust. Defendant First American Bank (trustee) is the successor trustee. Defendants Richard I. Angell, M.D., and four charitable organizations are contingent remaindermen, and the Attorney General of the State of Illinois is a nominal defendant under the Charitable Trust Act (760 ILCS 55/1 et seq. (West 1996)).

Article 6 of the trust instrument pertains to the distribution of the residuary trust after Helen's death. Section 1 provides that the income and principal of the residuary trust "may" be distributed at the discretion of the trustee for plaintiff's support, education and health needs "considering his standard of living at [Helen's] death." Section 2 provides that upon plaintiff's death, the trust proceeds "shall" be distributed to Helen's descendants and their spouses as appointed in plaintiff's will, "provided, however, [plaintiff] may not so appoint to himself, his estate, his creditor or the creditors of his estate." Section 3 provides for the distribution of the residuary trust to Helen's grandchildren upon the death of plaintiff's appointees; and section 4 provides for contingency distribution of the trust proceeds to the defendant remaindermen in default of beneficiaries appointed under section 3.

In January 1997, when the trust corpus amounted to approximately $450,000, plaintiff presented a "proposed acceleration settlement" to the contingent remaindermen. Plaintiff proposed to distribute the trust as follows: 65% to himself, or $292,500; $78,750 to Angell; and $19,687.50 to each of the charitable remaindermen. On June 13, 1997, plaintiff filed his complaint for declaratory relief seeking court approval of the proposed settlement on grounds of (1) a bona fide family controversy between himself and Dr. Angell, and (2) defects in the trust instrument. Plaintiff thereafter moved for summary judgment, claiming that four of the contingent remaindermen had accepted the proposed settlement and the fifth, Episcopal Charities, had taken no position.

On October 1, 1997, the trustee answered the complaint and filed its opposition to plaintiff's summary judgment motion. In both pleadings, the trustee denied both that there was a bona fide family controversy and that the trust instrument was defective. The trustee requested that the complaint be dismissed and that judgment be entered against plaintiff.

Following a contested hearing, the trial court found that (1) there were no genuine issues of material fact; (2) there was no basis for believing that prolonged litigation would result over the proceeds of Helen's estate or that family relationships would be impaired; and (3) the proposed settlement would frustrate the trust settlor's intent. Accordingly, the court denied plaintiff's motion for summary judgment and dismissed the complaint with prejudice. In a post-judgment motion, plaintiff requested leave to amend his complaint. The motion was denied, and plaintiff appeals.

ISSUES AND ANALYSIS

I. The Family Settlement Doctrine

Initially, plaintiff argues that he was entitled to summary judgment because the elements of the family settlement doctrine were established as a matter of law. We disagree.

Family settlement agreements are encouraged in situations where there is a reasonable or substantial basis for believing that prolonged or expensive litigation will result over the proceeds or distribution of an estate, the estate will be depleted, and family relationships will be "torn asunder." Wolf v. Uhlemann, 325 Ill. 165, 183, 156 N.E. 334, 340 (1927). A bona fide dispute between rival beneficiaries which would give rise to prolonged, estate-depleting litigation may constitute adequate consideration for the parties' mutual concessions in a settlement agreement. Wolf, 325 Ill. 165, 156 N.E.2d 334. However, family settlement agreements cannot be employed simply to accelerate distribution of a trust corpus in contravention of the settlor's express intent in the trust instrument. Altemeier v. Harris, 403 Ill. 345, 86 N.E.2d 229 (1949). Only where the design and object of a trust has been practically accomplished and all of the interests created by it have become vested may the trust be terminated by agreement. Mohler v. Wesner, 382 Ill. 225, 47 N.E.2d 64 (1943). Accordingly, family settlement agreements are subjected to close scrutiny to determine whether the disputes they purport to resolve are genuine or simply ill- conceived threats concocted to subvert the settlor's intent. In re Estate of McCabe, 95 Ill. App. 3d 1081, 420 N.E.2d 1024 (1981).

In this case, plaintiff alleged that he might marry a woman with children that he might adopt, and he might then exercise his power of appointment under the trust in favor of the children. He described Dr. Angell as his "quasi step-brother" based on an allegation that Helen reared him from age 12, upon the death of Angell's mother. He alleged that the settlement agreement would prevent a "bona fide family controversy with Dr. Angell" from arising. Plaintiff further alleged that ...


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